The Beck’s/AgDay College Roadshow traveled to South Dakota State University in Brookings this week.
Mike Minor, Professional Ag Marketing is an SDSU graduate and was one of the panelists for the College Roadshow Market Round Table.
Minor says as harvest season starts to wind down for U.S. and South Dakota farmers they are facing four year lows in prices.
The good news is that has started to uncover demand as end users see these as value levels.
But is demand strong enough to chew through the current nearly 2 billion bushel corn ending stocks and 550 million bushel soybean carryout and rally in grain prices?
“So, on the corn side I think so. We’ve seen pretty good support around $4. We’ve found on the export market we’ve seen business from Mexico with maybe a little front loading of their export business to start off the new marketing year,” he says.
Ethanol production has also been strong to kick off the new marketing year.
However, for soybeans he says the setup is different.
“We’ve got a half billion bushels of soybean carryout to get through so we’re headed in the wrong direction there and we’ve haven’t really stimulated any new demand yet,” he adds.
This is especially a concern as South America is starting to receive rain and planting pace has picked up close to normal.
Minor says that could help get their record soybean crop in Brazil off to a great start and mean downside risk for the soybean market.
With corn and soybeans well under last fall’s prices are farmers under their break even levels?
Matthew Elliott, SDSU Extension Agribusiness Specialist and Associate Professor in the Ness School of Management and Economics, says it depends heavily on what the farmer’s yields were as some producers may have been able to bushel up and make a profit.
How will that effect decisions for 2025?
Elliott says the market is incentivizing more corn acres as the corn to soybean price ratio is currently at about 2.3 to 1.
“I think the market is looking at a shift of about 3.5 million acres of corn coming from soybeans,” he explains.
So what is the state of the economy and specifically the farm economy?
The Federal Reserve has started to lower interest rates to help the U.S. economy have a soft landing.
However, Joe Santos, Director of the Ness School of Management and Economics at SDSU, says, “Well interest rates if they remain relatively high compared to history I think that will continue to tighten economic performance in general including agricultural performance.”
He thinks at the November FOMC meeting there could be some disappointment by those thinking the Fed is going to decrease interest rates and that they would fall rather quickly.
“I don’t think the economic data suggests that would be the appropriate path. The real economy has bounced back and employment data is strong and inflation data is good but all of this signaling to the Central Bank that interest rates can not go down as quickly as they had once anticipated,” he adds.
